Content area
Full Text
A growing number of countries around the world apply the cash-basis IPSAS (International Public Sector Accounting Standards) when preparing government financial statements. For supreme audit institutions (SAIs) the adoption of the cashbasis IPSAS is a welcome development, as the International Standards of Supreme Audit Institutions (ISSAI 1210, § A8) list IPSAS as an acceptable general purpose financial reporting framework. This article deals with some of the challenges faced by SAIs when auditing cash-basis IPSAS financial statements.
Compliance with the requirements as well as the encouragement of the cash-basis IPSAS (IPSAS - Financial Reporting under the Cash Basis of Accounting, http://www. ifac.org/sites/default/files/publications/files/financial-reporting-under-t.pdf) enhances comprehensive and transparent financial reporting of the cash receipts, cash payments, and cash balances of the government. Compliance will also enhance comparability of the government's financial statements with the financial statements of other governments applying the cash-basis IPSAS.
Governments in developing countries usually adopt the cash-basis IPSAS as a stepping-stone towards the adoption of the accrual-basis IPSAS standards. The primary statement under the cash-basis IPSAS is the statement of cash receipts and payments. Many governments prepare financial statements on an accounting basis somewhere in between cash accounting and accrual accounting. Information regarding a modified cash basis or a modified accrual basis can be maintained under the cash-basis IPSAS, if relegated to the notes of the financial statements. By adopting the cash-basis IPSAS, and following the International Public Sector Accounting Standards Board's (IPSASB) encouragement to prepare the statement of cash receipts and payments in the format of a cash flow statement, the government effectively complies with IPSAS 2 Cash Flow Statements, a standard from the accrual suite of IPSAS standards (http://www.ifac.org/ sitesldefaultlfileslpublicationslfileslipsas-2-cash-flow-stateme.pdf).
Adoption of the cash-basis IPSAS
The cash-basis IPSAS is equally suitable for central governments and local governments. Examples of central governments applying the cash-basis IPSAS are Burkina Faso, Fiji, Liberia, Mauritius, Nigeria, Seychelles, Sierra Leone, Solomon Islands, and TimorLeste. An example of a local government applying the cash-basis IPSAS is the provincial government of Punjab in Pakistan. Not all of these governments fully comply with the cash-basis IPSAS, as yet. A list of governments adopting IPSAS is available on the website of the IPSASB, at http://www.ifac.org/public-sector.
Cash-basis IPSAS standard
IPSASs are promulgated by the IPSASB under the auspices of the International...